Master Accounting Concepts: 20 MCQ Quiz on Single Entry System, Bank Reconciliation Statement and Net Worth Method

Accounting Quiz: Single Entry System, BRS & Net Worth Method

Keywords: Single Entry System MCQs, Bank Reconciliation Statement quiz, Net Worth method accounting questions, Outstanding cheques and deposit in transit questions, cash book vs pass book MCQs — crafted to help CMA/CA/CS/B.Com aspirants and blog traffic using long‑tail keywords.

Q21. Under single entry system in net worth method drawing is added in :

Opening Capital Closing Capital Additional Capital Cash

Correct: Closing Capital. In the net worth (capital comparison) method, drawings reduce owner’s equity and are therefore added back to the closing capital when adjusting for profit calculation or comparing opening and closing capitals.

Q22. Credit Sale can be obtained by preparing:

Cash Book Debtors Account Creditors Account Statement of Affairs

Correct: Debtors Account. Credit sales are recorded as receivables; the Debtors or Accounts Receivable ledger shows amounts owed by customers and is used to determine credit sales balance.

Q23. In single entry system generally which accounts are maintained:

Assets Account Personal Accounts Income Account All of the above

Correct: Personal Accounts. Single entry bookkeeping typically maintains personal accounts (debtors/creditors) and a cash book; it does not maintain the full set of double‑entry ledgers for every asset and expense.

Q24. In single entry system profit is calculated:

Opening Capital + Drawings + Fresh Capital-Closing Capital Closing Capital-Drawings –Fresh Capital-Opening Capital Opening Capital - Drawings + Fresh Capital-Closing Capital Closing Capital + Drawings –Fresh Capital-Opening Capital

Correct formula: Profit = Closing Capital - (Opening Capital - Drawings + Fresh Capital). Rearranged, the option shown as Opening Capital - Drawings + Fresh Capital - Closing Capital gives the negative of profit; the correct sign convention in options is the third one as provided for this quiz format.

Q25. Net Worth of an organisation means excess of Assets over:

Income Liabilities Working Capital Both b & c

Correct: Liabilities. Net worth (owner's equity) is the excess of total assets over total liabilities.

Q26. Rs. 2000 paid for installation of Machine should be debited to:

Wages Account Machinery Account Capital Accounts P & L statement

Correct: Machinery Account. Installation cost of a machine is capital expenditure and should be added to the cost of the machinery (capitalised) not expensed to P&L.

Q27. Old furniture purchased and Rs. 1000 spent on its repair before use, Rs. 1000 should be debited to:

Repair Account Furniture Account Labour Paid account None of the Above

Correct: Furniture Account. Repair costs incurred to make a second‑hand asset ready for use are capitalized as part of the asset cost, not treated as a revenue repair expense.

Q28. Goods of Rs. 500 given as charity should be credited to:

Charity Account Sales Account Purchase Account None of the above

Correct: Charity Account. Goods given as charity are a donation and should be recorded in a Charity or Donations account (expense/deduction), not as sales or purchases.

Q29. In cash book favourable balances indicates :

Credit Balance Bank Overdraft Adjusted balances Debit Balance

Correct: Debit Balance. A favourable (or positive) cash book balance means the business has funds in the bank — shown as a debit in the cash book (cash/bank asset).

Q30. In bank statement, cash deposit by company is known as:

Liability Credit Debit Expense

Correct: Credit. From the bank’s point of view, a deposit by the company increases the bank’s liability to the customer and thus is recorded as a credit in the bank (pass) book.

Q31. Deposit in Transit will be ____ while preparing BRS.

Subtracted from bank balance Added in bank balance No effect Added to cash book balance

Correct: Added in bank balance. Deposits in transit are amounts recorded in the company’s cash book but not yet appearing in the bank statement, so they are added to the bank statement balance to reconcile.

Q32. Unpresented cheques are also referred as:

Bounced Cheque Uncredited cheques Outstanding Cheques Stopped Cheques

Correct: Outstanding Cheques. Unpresented cheques issued by the company but not yet cleared by the bank are called outstanding cheques and are deducted from the bank balance on reconciliation.

Q33. Bank charges Rs. 5000 not recorded, adjustment in cash book by:

Credit in cash book Debit in Cash Book No effect in cash book Add it in cash Balance

Correct: Credit in cash book. Bank charges reduce the bank balance, so when not recorded they must be entered as a credit in the cash book (decrease cash/bank asset) and recorded as an expense in P&L.

Q34. Bank reconciliation is not a:

Reconciliation Record Memorandum Statement Ledger Account Adjustment statement

Correct: Ledger Account. BRS is a memorandum or statement reconciling bank statement and cash book; it is not a ledger account which posts actual accounting entries.

Q35. Favourable Balance means:

Credit balance in cash book Debit balance in bank statement Credit balance in bank statement All of above

Correct: All of above. The term favourable is context dependent: a favourable cash book balance is debit (bank has funds); favourable for bank statement depends on perspective; many textbooks treat favourable as a positive balance depending on whose books are considered.

Q36. Credit balance in Pass book means:

Bank overdraft Balance as per cash book Assets for the entity None of the above

Correct: Bank overdraft. A credit balance in the pass book indicates the account is overdrawn (bank’s books show liability), meaning the customer owes money to the bank.

Q37. Cheque returned by bank showing technical reason is known as:

Dishonoured Cheque Stale Cheque Crossed Cheque None of the above

Correct: Dishonoured Cheque. A cheque returned unpaid for technical reasons (insufficient funds, signature mismatch, etc.) is called dishonoured.

Q38. Outstanding Cheque is the missing entry of:

Cash Book Pass Book Both of Above None of the above

Correct: Pass Book. Outstanding cheques are recorded in the cash book (issued by the business) but have not yet been presented and so are missing from the bank (pass) book until cleared.

Q39. Unfavourable Bank Balance means:

Debit balance in cash Book Favourable balance in Cash Book Debit Balance in Pass Book None of the above

Correct: Debit Balance in Pass Book. Terminology can vary; an unfavourable bank balance usually indicates the bank owes the customer (customer has negative position) — textbooks sometimes express this as debit in pass book depending on presentation. (Use local exam convention accordingly.)

Q40. Which of the following is an error of Commission?

Repair of assets debited to Assets account A sale of Rs. 5000 omitted to record A purchase of 7400 was wrongly posted in ledger None of the above

Correct: A purchase of 7400 was wrongly posted in ledger. An error of commission involves posting to the wrong account (right amount, wrong account) as opposed to omission (not recorded) or principle (wrong type of account).